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Maria is reviewing stocks for inclusion in her investment portfolio. The stock she wishes to analyze is ABC Ltd, a diversified manufacturer of pet products.
Maria is reviewing stocks for inclusion in her investment portfolio. The stock she wishes to analyze is ABC Ltd, a diversified manufacturer of pet products. One of her key concerns is risk; as a rule, she will invest only in stocks with a standard deviation below 10%. She has gathered price and dividend data shown below, for ABC over the past 3 years, 2013-2015, and assumes that each year's return is equally probable. Stock Price Year Beginning End Dividend paid 2013 $35.00 $36.50 $3.50 2014 36.50 34.50 3.50 2015 34.50 35.00 4.00 Calculate the average return and the standard deviation of ABC for the period from 2013 to 2015. Show all your calculations and explain your answer (no word limit for this exercise)
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